By Syed Inam Ali Naqvi
After Donald Trump’s victory in the elections, the global political and economic landscape has been undergoing significant changes. Trump, with his vision of "Making America Great Again,” has reasserted his influence on the world stage, focusing on economic nationalism and protectionism. At the same time, the BRICS nations—Brazil, Russia, India, China, and South Africa—are actively challenging the foundations of the US-led economic order. They are advocating for alternatives to the U.S. dollar in international trade, a move that could have far-reaching consequences for the U.S. economy. In response to this, Trump issued a provocative statement, warning that the U.S. would no longer stand by while BRICS countries seek to move away from the dollar. His threats to impose a 100% tariff on BRICS nations if they attempt to create a rival currency to the dollar raised serious questions about the broader implications of such a stance.
The main objective behind Trump’s proposed tariffs is to deter BRICS nations from establishing a new currency or backing alternatives to the U.S. dollar. However, history suggests that this approach may not only fail but could potentially backfire. The BRICS countries have long been vocal about reducing their dependence on the dollar, with some leaders even proposing the creation of a BRICS currency. Although progress on this front has been slow due to internal disagreements, the idea remains a topic of discussion. By threatening tariffs, Trump is hoping to use economic leverage to dissuade these countries from pursuing this agenda. But tariffs, as an economic tool, have proven to be ineffective at halting such ambitions. In fact, the imposition of high tariffs could accelerate the move away from the dollar by pushing BRICS nations to seek alternatives like the Chinese yuan or explore the creation of a shared currency. This would erode the dollar’s dominance in global trade, diminishing its value over time.
Imposing a 100% tariff on BRICS countries would have immediate and severe consequences for U.S. supply chains. China, a key member of the BRICS group, is a major supplier of consumer goods and manufacturing components to the U.S. American businesses depend heavily on Chinese imports to keep their costs low. For example, major companies like Apple rely on Chinese manufacturing for their products. Doubling the cost of imported components would force these companies to either absorb the increased costs or pass them on to consumers. In a country already grappling with inflation, this could exacerbate the financial strain on American households, weakening the dollar’s purchasing power. The 2018-2019 U.S.-China trade war provides a cautionary tale. During that period, tariffs led to higher prices for everyday goods, from electronics to groceries. A 100% tariff would likely magnify these effects, further eroding the purchasing power of American consumers and undermining the very economic stability that supports the dollar’s status as the world’s reserve currency.
Another critical factor to consider is the potential for retaliation from BRICS nations. Tariffs are often a trigger for retaliatory actions, and BRICS nations are unlikely to accept a 100% tariff without responding in kind. This could lead to a full-scale trade war, with BRICS countries targeting key American industries such as agriculture, technology, and manufacturing. For example, during the U.S.-China trade war, China retaliated by imposing tariffs on U.S. soybeans, significantly reducing exports and causing substantial losses for American farmers. If BRICS countries were to coordinate similar countermeasures, the economic fallout would be severe, leading to a reduction in U.S. exports and further weakening the dollar’s position in the global economy.
The U.S. dollar’s status as the world’s reserve currency is not just a matter of economic dominance; it also relies on trust and stability. Policies perceived as punitive or destabilizing—such as the 100% tariff—risk eroding that trust. BRICS nations have already begun diversifying their reserves by reducing their dollar holdings and investing in non-dollar assets. If Trump’s tariffs are implemented, they could reinforce the perception that the U.S. uses its currency as a tool of economic coercion, accelerating the shift toward a multipolar currency system. This would diminish the dollar’s role as the global reserve currency and have profound implications for the U.S. economy. It would make it more expensive for the U.S. government to borrow money, increase inflation, and reduce the global demand for dollars.
Ironically, Trump’s proposed tariffs might strengthen the very alternatives to the U.S. dollar that he seeks to undermine. In recent years, BRICS nations have been taking significant steps to develop financial infrastructure independent of the dollar. For instance, Russia has created its own alternative to SWIFT, the global payment messaging system, and China has promoted yuan-based trade through its Belt and Road Initiative. Facing prohibitive tariffs, BRICS countries may accelerate these efforts, working to create a unified financial system or even a shared currency. In doing so, BRICS could position themselves as a viable alternative to the U.S.-dominated global economic system, weakening American influence on the world stage.
Trump’s rhetoric and proposed policies reflect a broader strategy to reassert U.S. economic dominance, but they risk undermining the very systems he seeks to protect. By accelerating de-dollarization, provoking retaliatory measures, and disrupting global supply chains, a 100% tariff on BRICS nations could destabilize the global economy and weaken the dollar’s reserve status. The dollar’s dominance is not guaranteed; it is built on trust, stability, and prudent policy. A heavy-handed tariff strategy could erode these foundations, leaving the U.S. in a weaker economic and geopolitical position.
As the global economic landscape continues to shift, the U.S. must adapt with a more nuanced approach, balancing competition with cooperation. In an interconnected world, economic strength does not come from isolationism but from strategic engagement. The question is not whether the U.S. can afford to act aggressively—it is whether it can afford the consequences of such a strategy.
The views expressed in this article belong to the author only, and do not necessarily reflect the views of The Global Politico.
